August 18, 2020
The COVID-19 pandemic has fanned the flames of geopolitical tensions and highlighted the important distinction between trading partners and long-term friends and allies.
Australia should trade with everyone, but to safeguard our freedom and prosperity we must strengthen our economic relationships with countries that share our values.
The negotiations under way for an Australia-UK free trade agreement are more important than just any bilateral trade deal. Of course, the immediate priority is a comprehensive bilateral agreement that eliminates tariffs, quotas and other barriers to trade. It should also include generous visa-free travel provisions for citizens of both countries.
But the negotiations are also an opportunity to lay the foundations for deeper co-operation between Australia, Britain and other like-minded countries.
Australia and Britain share historical, cultural, legal and familial ties dating back to 1788. These have been strengthened through friendly rivalries on the sporting field and shared adversity on the battlefield. Australia has been the top destination for British migrants for 40 of the past 43 years. There were more than 1.2 million UK-born residents in Australia at the time of the 2016 census, almost 5 per cent of the population. And according to a 2018 YouGov poll, Australians are the immigrant group viewed as having made the most positive contribution to British life.
Even with barriers such as the EU’s Common External Tariff, Britain is Australia’s seventh largest two-way trading partner. It also provides 18 per cent of all Australia’s foreign investment, second only to the US. Yet despite these strengths, Britain’s membership of the EU has prevented the level of co-operation that otherwise would have developed during past 47 years.
This all changed with Brexit. We now have the opportunity to build on the unparalleled ties between us. The free trade negotiations that began in June are a start, and as British Trade Secretary Liz Truss said last year, the UK is aiming for “a fully comprehensive trade deal that reflects our deep, ongoing relationship … (and) the fact that Australians want to come and live and work in Britain, and Brits want to come and live and work in Australia”.
The type of agreement Truss describes exists in the form of the Closer Economic Relations deal between Australia and New Zealand, which the World Trade Organisation has described as “the world’s most comprehensive, effective and mutually compatible free trade agreement”.
The CER is the product of 30 years of finetuning and development, so it’s unlikely to be replicated overnight. But it provides a blueprint for what is possible and there are key principles that should form the basis of an Australia-UK agreement, notably the use of mutual recognition of standards. In the words of the Productivity Commission, mutual recognition “provides a low-cost, decentralised way of removing impediments to the mobility of goods and labour, while allowing jurisdictions to retain a degree of regulatory independence”.
Just as the CER agreement is complemented by the Trans-Tasman Travel Arrangement, an Australia-UK agreement should aim for a similarly broad visa arrangement. British Prime Minister Boris Johnson has been publicly in favour of such a free mobility agreement since 2013, but as a first step we could begin with a special work visa with lower regulations than the standard work visas in both countries. This would be similar to the US’s E-3 visa, which is part of the Australia-US FTA.
New Zealand is also pursuing an ambitious trade deal with Britain. Once Australia and the UK have developed a level of economic integration similar to the CER agreement, the obvious long-term goal will be to use these as the basis for a broader agreement including Canada. An agreement between all CANZUK countries would unite four of world’s freest economies and serve as an important vehicle for the promotion of the liberal rules-based order. We also share a head of state, common-law legal system and language, and co-operate on security through the Five Eyes intelligence network.
Polling shows that CANZUK free movement has overwhelming support in all four countries, ranging from 82 per cent in New Zealand to 68 per cent in the UK.
CANZUK’s popularity in the UK may seem strange since the British public only recently voted to leave the EU. But this ignores the importance of cultural ties and the differences between the EU and a CER-style or CANZUK agreement. Neither of the last two involves a loss of sovereignty. There would be supranational bureaucracy, it would not override domestic law, and there’d be no commitment to “ever-closer union”. The agreement instead would rely on continued voluntary commitment of each nation, with government being free to leave or renegotiate.
COVID-19 has revealed the uncertain world in which we live, with threats of economic coercion and trade disputes. It is time to strengthen the economic ties between like-minded countries. This FTA can provide the foundation for a new level of co-operation reinforcing our democracy, sovereignty and freedom.
James Paterson is a Liberal senator for Victoria. This is an edited extract of his paper for the Adam Smith Institute of London.
